As the business sector have grown more aware of the corruption, partly due to codes of conduct and the OECD, it becomes more and more important that the terms "corruption" and "bribery" would be more defined- now it differs between different jurisdictions what actually is meant by the terms, as also can be seen by the different types of bribery. [1] There are issues with a tribunal claimed even when the arbitrators may conclude corruption. [2] Further there have been established CETS for classifying different types of corrupt practices. The arbitration is aprivate process where the parties refer a independent actor other than court jurisdiction in case of dispute as a clause in the contract. [3]
Critique of foreign arbitrators
It has been questionable if the arbitrator are allowed to investigate a bribery sua sponte since it is a contracual issue, and sometimes both parties concerned may want to deny that any bribery took place. It may be that only the fact and circumstances suggest that bribery has tainted the contract, as also stated by corruption measurements, with no further evidence. Arbitrators themselves are often subjects to two types of duties to report bribery; moral and legal but santionless, and legal and backed by criminal santions.[4] Arbitrators act outside the juriciary, which makes it even harder to decide which law system should be followed. The arbitrators may choose to follow transnational public policy such as UN , posessing a broad consensus and where the states involved have different definitions of bribery and doesn't incriminate the same range of behaviour thus making the arbitrators stance very diffuse at the best on what to do and whom to punish and for what.[5]
"The general consensus is that this is a murky area for any arbitrator, and one that may arguably be affected by the passage of the Bribery Act and its expansive jurisdiction provisions."[6] "However, there was no evidence showing that the agent received bribe in order to enter into the arbitration agreement instead of, for instance, a jurisdiction clause." (Chan and Liang 2009)
The corruption within arbitration
It has been questionable, to which extent the authorities should futher investigate possible findings of corruption, and when to leave the issue and thrust the arbitrators. This means the arbitrators has power, being able to throw one of the parties into corruption court, possible the party being even innocent but still forced to santions. It has been concluded that the systems should not entirely depend on arbitrators, but also on the parties involved.The arbitrator may easily get coloured perception by rumours and therefore state the outcome in a certain way. Further there are cases where arbitrators may suspect corruption but with failure of proof, and the arbitrators may let the parties then color consciously or unconsciously the arbitrators view on the dispute.[7] Speller and Beale further see the choice of laws is extremely important for the outcome of the investigation; especially when at many occassions the arbitrator have to use the laws chosen by the parties concerned in the contract.Speller and Beale discuss the openly stated demand of proof; where is the line driven what kind of proof is given, when have the companies failed to provide sufficient proof and to what extent should the arbitrators investigate the parties, without favouring one party over the other. [8]
Thus, when giving the investor such power it is easily that the arbitrator becomes corrupted, and would favor one of the disputing companies as a result of a veneer of commercial arrangements. The issue of misusing the arbitrators as a reason to have an inconvenient contract declared invalid is also questionable. It seems as arbitrators are uncomfortable with the corruption issue, and tries to side-step it as much as possible, and cases such as Thunderbird indicates that the arbitrators are paid to violate the domestic laws to such extent that the investor's investment can be made "according to laws". These small transaction bribes seldom get caught, and it seems hard to draw the line for the arbitrators and how to threat the vast sea of corruption woithout getting caught up in the spiderweb of transactions themselves.[9] Cremades and Cairns states "If the defendant doesn't use the word "bribery " in his presentation of facts, the Arbitral tribunal doesn't have to investigate the case."[10]
It has been stated by Bhojwani that the arbitrators aren't primarly concerned with deterring bribary, but with the integrity of their own arbitration (investigation) system that will be compromised would the arbitrators give effect to a contact tainted by corruption. Yet, this concern leaves the tribunal much space and cover up possibilities. [11] It can further be concluded that corrupted arbitrators seldom get caught, since the contracts usually are then laid at rest and the disputes avoided before they even rose. It has been questionable when and how the arbitrators should be held responsible for disclosing suspicions of corruption, what the wages should be and who to punish them or why if they have concluded that a certain contract was valid ( even with a slight hint of suspicion of corruption) or that there is a failure of sufficient evidence of bribery when being paid for the investigation.[12]
Foreign arbitration in Finland
Finland is a member of ICC, (International Chamber of commmerce), an organ wich includes an anti-corruption clause[13], as well as of CETS and GRECO. By being a member in several anti-corruption organisations, Finland aim to continue to keep its corruption low and fight the bribery of arbitrators, both foreign and national. In June 2013 Finlands Chamber of commerce edited their rules of arbitration, so that the processes should be speeded up and more cost-effective and thus also more attractive for foreigners.//[14] Finland has a separate arbitration institute, which is an independent organisation but applies under the UNCITRAL rules. [15]
Youtube videos on issues in arbitration
Pepperdine University
The well-known Gary Born lecturing on news in international arbitration; the Bit, Bat and Buts.
^ Pavic, V. (2012). Bribery and international commercial arbitration-the role of mandatory rules and public policy. VUWLR 2012, 43, pp661-686
^Chan, F., Liang Z. (2009). Enforcing an Arbitration Agreement tainted by bribery: Cautions and controversies. The business review, Cambridge. Summer 2009 : 108-113
^ Pavic, V. (2012). Bribery and international commercial arbitration-the role of mandatory rules and public policy. VUWLR 2012, 43, pp661-686
^ Pavic, V. (2012). Bribery and international commercial arbitration-the role of mandatory rules and public policy. VUWLR 2012, 43, pp661-686
^ Anonymous. (2008). International law and the fight against corruption. American society of International law. Proceedings of the annual meeting.
^ Cremades, B., Cairns, D. (2003). Corruption, International public policy and the duties of arbitrators. Dispute Resolution Journal (Nov 2003-Jan 2004): 76-85.
^ Bhojwani, R. (2012). Deterring Global bribery: where public and private enforcement collide. Columbia law review
2012/07/112-1
^ Cremades, B., Cairns, D. (2003). Corruption, International public policy and the duties of arbitrators. Dispute Resolution Journal (Nov 2003-Jan 2004): 76-85.
Bribery of Foreign arbitrators
Table of Contents
Critique of foreign arbitrators
It has been questionable if the arbitrator are allowed to investigate a bribery sua sponte since it is a contracual issue, and sometimes both parties concerned may want to deny that any bribery took place. It may be that only the fact and circumstances suggest that bribery has tainted the contract, as also stated by corruption measurements, with no further evidence. Arbitrators themselves are often subjects to two types of duties to report bribery; moral and legal but santionless, and legal and backed by criminal santions.[4] Arbitrators act outside the juriciary, which makes it even harder to decide which law system should be followed. The arbitrators may choose to follow transnational public policy such as UN , posessing a broad consensus and where the states involved have different definitions of bribery and doesn't incriminate the same range of behaviour thus making the arbitrators stance very diffuse at the best on what to do and whom to punish and for what.[5]
"The general consensus is that this is a murky area for any arbitrator, and one that may arguably be affected by the passage of the Bribery Act and its expansive jurisdiction provisions."[6] "However, there was no evidence showing that the agent received bribe in order to enter into the arbitration agreement instead of, for instance, a jurisdiction clause." (Chan and Liang 2009)
The corruption within arbitration
It has been questionable, to which extent the authorities should futher investigate possible findings of corruption, and when to leave the issue and thrust the arbitrators. This means the arbitrators has power, being able to throw one of the parties into corruption court, possible the party being even innocent but still forced to santions. It has been concluded that the systems should not entirely depend on arbitrators, but also on the parties involved.The arbitrator may easily get coloured perception by rumours and therefore state the outcome in a certain way. Further there are cases where arbitrators may suspect corruption but with failure of proof, and the arbitrators may let the parties then color consciously or unconsciously the arbitrators view on the dispute.[7] Speller and Beale further see the choice of laws is extremely important for the outcome of the investigation; especially when at many occassions the arbitrator have to use the laws chosen by the parties concerned in the contract.Speller and Beale discuss the openly stated demand of proof; where is the line driven what kind of proof is given, when have the companies failed to provide sufficient proof and to what extent should the arbitrators investigate the parties, without favouring one party over the other. [8]
Thus, when giving the investor such power it is easily that the arbitrator becomes corrupted, and would favor one of the disputing companies as a result of a veneer of commercial arrangements. The issue of misusing the arbitrators as a reason to have an inconvenient contract declared invalid is also questionable. It seems as arbitrators are uncomfortable with the corruption issue, and tries to side-step it as much as possible, and cases such as Thunderbird indicates that the arbitrators are paid to violate the domestic laws to such extent that the investor's investment can be made "according to laws". These small transaction bribes seldom get caught, and it seems hard to draw the line for the arbitrators and how to threat the vast sea of corruption woithout getting caught up in the spiderweb of transactions themselves.[9] Cremades and Cairns states "If the defendant doesn't use the word "bribery " in his presentation of facts, the Arbitral tribunal doesn't have to investigate the case."[10]
It has been stated by Bhojwani that the arbitrators aren't primarly concerned with deterring bribary, but with the integrity of their own arbitration (investigation) system that will be compromised would the arbitrators give effect to a contact tainted by corruption. Yet, this concern leaves the tribunal much space and cover up possibilities. [11] It can further be concluded that corrupted arbitrators seldom get caught, since the contracts usually are then laid at rest and the disputes avoided before they even rose. It has been questionable when and how the arbitrators should be held responsible for disclosing suspicions of corruption, what the wages should be and who to punish them or why if they have concluded that a certain contract was valid ( even with a slight hint of suspicion of corruption) or that there is a failure of sufficient evidence of bribery when being paid for the investigation.[12]
Foreign arbitration in Finland
Finland is a member of ICC, (International Chamber of commmerce), an organ wich includes an anti-corruption clause[13], as well as of CETS and
GRECO. By being a member in several anti-corruption organisations, Finland aim to continue to keep its corruption low and fight the bribery of arbitrators, both foreign and national. In June 2013 Finlands Chamber of commerce edited their rules of arbitration, so that the processes should be speeded up and more cost-effective and thus also more attractive for foreigners.//[14] Finland has a separate arbitration institute, which is an independent organisation but applies under the UNCITRAL rules. [15]
Youtube videos on issues in arbitration
Pepperdine University
The well-known Gary Born lecturing on news in international arbitration; the Bit, Bat and Buts.
Asian International Arbitration Journal May 2012. Available at:
http://www.arbitration-icca.org/media/0/13261720320840/corruption_in_arbitration_paper_draft_248.pdf
(Nov 2003-Jan 2004): 76-85.
2012/07/112-1
(Nov 2003-Jan 2004): 76-85.
http://www.iccwbo.org/Advocacy-Codes-and-Rules/Areas-of-work/Corporate-Responsibility-and-Anti-corruption/Buisness-Ethics-Documents/ICC-Anti-corruption-Clause/
Savonen, J. (2014).New arbitration rules in Finland- Chamber of commerce aiming at speedier and more cost-efficient proceedings. Available at:
http://www.peltonenlmr.fi/newsletters/new-arbitration-rules-finland-chamber-commerce-aiming-speedier-and-more-cost-efficient